The newest have-not is out of step with the country’s fastest-growing provinces

Imagine it is 1978, the year Ontario’s current construction labour framework was passed into law. You are an investor intending to build a major project such as a factory or power plant. No matter where you choose to invest in Canada, the only workforce that has the skills and capacity to complete your project is the one organized by the craft unions affiliated with the various provincial Building and Construction Trades Councils. You could receive competitive bids for your project, but all of those bids will be based on the same labour agreement, negotiated between employers as a group and their unions.

It’s a complicated and messy history but if we fast-forward 30 years, that situation has changed dramatically. In British Columbia and Alberta (and to some extent other provinces), major projects are receiving bids from open-shop non-union contractors, alternative unions and the traditional craft unions. There are no known studies that measure the correlation between these competitive labour pool environments and the comparative economic prosperity enjoyed by those provinces in recent years, but anecdotal evidence and logic both suggest a strong link between competitive bidding and broad economic success.

Ironically, while all this was going on, Ontario was heading in the opposite direction. Working agreements among municipalities, school boards and many corporate investors prevented contractors without labour agreements with craft unions from even bidding on projects. Those provinces with competitive labour pools are thriving. Ontario, where competition is suppressed, is now a “have-not” province almost completely out of step with the country’s fastest-growing provinces when it comes to the organization of construction labour.

This tale of two economic directions took place due to changes in labour law — at least in part. But a closer examination shows legislative change actually followed competitive innovation rather than led it. The non-union sector in the more advanced provinces organized itself aggressively to provide union-type services such as hiring hall banks, group benefits and portability of benefits between employers. Various unions, including the International Wood and Allied Workers of Canada (IWA), Communication Energy and Paperworkers Union of Canada (CEP) and even the Labourers and Carpenters Unions began using the industrial model (all crafts in a single union). The Christian Labour Association of Canada (CLAC) combined this industrial or “wall-to-wall” model with a “partnership philosophy” and has seen significant growth in the past decade, particularly in Alberta and B.C.

The significance of these developments is that the entire context for organizing construction labour relations has changed in most provinces. Whereas adversarial labour tactics that leveraged short-term opportunities (even to the detriment of the long-term stability of the industry) were once the norm, most craft unions in competitive markets now tend to focus on longer-term strategies.

Defenders of the closed model are quick to suggest that the shift to labour pool competition amounted to implementation of an ideological anti-union agenda that has put the burden on the backs of workers. While the motives of some has undoubtedly fit that characterization, the fact remains that in order to develop a labour pool with the skills and capacity to construct major projects (skills that are limited in supply and consequently attract a significant market price), construction workers need to be well-compensated or they will go to the competition. The reality today is that while each pool has a core of workers that are ideologically committed to the pro- or anti-union philosophies that characterize their organizations, many workers freely move among the craft union, industrial union and non-union models of organization and take the available jobs that best suit their circumstances.

Ontario, by contrast, continues with a model that effectively guarantees that the only available work forces with the skills to complete major projects are those organized by the craft unions. Without the competitive pressures of the alternative models, there is very little if any of the inspiration required to spur innovation, without which economies sputter and fail.

Ontario is now proceeding with significant infrastructure investments, particularly in power generation, and it is high time the province assessed its competitive position in the country. A “competitive labour pool” model similar to those in effect in Alberta and British Columbia creates fewer jurisdictional disputes, promotes local efficiency and encourages innovation on a macro level. It’s proven to be an environment in which unions not only survive but thrive while helping ensure the long-term health of the industries that keep their members employed. Understanding and building on the value added by everyone at the table is essential for Ontario’s economic future. Discussion of this deserving topic is overdue — if anyone has sufficient courage to break the awkward and uneconomic silence.

Financial Post
Ray Pennings, Director of Research for Cardus, a Hamilton-based think tank, will be addressing Ontario’s constructions costs before the Economic Club of Toronto on Wednesday.